Can Felons Short Sale?

It depends on various factors on if a felon can or can’t participate in a short sale. It primarily depends on the type of felony one is convicted of and what short sale program you may or may not be required to be reviewed for.

The Dodd-Frank Certification is a document required to proceed with a HAFA short sale. The information on the form is requested by the federal government and in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act ( Pub.L. 111-2013 ). The law provides that no person shall be eligible from the Making Home Affordable Program, authorized under the Emergency Economic Stabilization Act of 2008, or any other mortgage assistance program funded by that act, if such person, in connection with a mortgage or real estate transaction, has been convicted, within the last 10 years, of any of the following:

(a) Felony larceny, theft, fraud, or forgery,

(b) Money laundering or

If the property was purchased by a FHA loan and it has to go through the Pre Foreclosure Sale Program, it’s likely that the borrower may not be able to participate in a short sale. HUD has advised us though that the legal department at the mortgage servicer would decide if they would proceed with the review or not.

This does not mean that you are out of luck as we were advised by management at a mortgage servicer that someone convicted of one of the above could be reviewed for a traditional short sale with no relocation. It seems that as long as you do not have be reviewed through a government program that you may still have a shot at being approved for a short sale.

Felons short sale all the time, but it’s important to have the foresight if this is something that may impact your particular case. For a free consultation please click here and contact a member of our team.

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